Ethereum
$241.74 0.64%
ETH · 16w

Huobi Adds Crypto 'Circuit Breaker' After Last Week's Mass Liquidations

In the aftermath of last week's cryptocurrency market crash, the Huobi exchange has launched a liquidation mechanism that would pull the plug on trading should prices become too volatile.

The Singapore-based firm said Wednesday the new mechanism, integrated into its crypto derivatives marketplace, would halt all liquidations – where a trader's position is automatically closed – during periods when volatility starts to present a real risk for traders.

Huobi's new feature comes a week after several crypto derivatives exchanges reported record liquidations following a sudden collapse in the bitcoin price. BitMEX registered more than $700 million in just 15 minutes last Thursday as bitcoin (BTC) plummeted through its support levels.

Such sudden and large movements may catch traders by surprise leading to a sudden rise in volatility levels. Ciara Sun, Huobi's vice president of global business, said market volatility can "lead to unnecessarily high-risk circumstances if the right measures aren't in place to protect them."

Liquidation mechanisms, like the one launched by Huobi's derivatives platform Huobi DM, are commonplace in traditional markets where they are used to temporarily halt trading. Known as circuit breakers, they are often activated to stop panic selling when markets come under sudden and extreme duress.

The New York Stock Exchange, for example, has activated circuit breakers in the immediate aftermath of 9/11 and during the 2008 financial crisis. Stock exchanges all around the world, including NYSE, have recently been forced to trigger them again as the coronavirus pandemic sparked a global sell-off in equities.

Huobi's liquidation mechanism also includes a new facility to gradually liquidate positions, rather than in a single event. Not found outside of the digital asset sphere, the only other exchange that uses a similar sliding liquidation mechanism is rival crypto derivatives platform, Bybit.

In the past...

Continue on coindesk.com
Recent news
ETH +0.64% · blog.trailofbits.com · 6h

Contract verification made easier

Smart contract authors can now express security properties in the same language they use to write their code (Solidity) and our new tool, manticore-verifier, will automatically verify those invariants...
ETH +0.64% · themarketmaker.net · 8h

Notable news and events in Ethereum for Q2 of 2020

Throughout 2020 we have witnessed a serious demand and therefor increase in liquidity across decentralized exchanges (DEX). Binance DEX, IDEX and the Kyber Network are the three that managed to ca...
ETH +0.64% · thedefiant.substack.com · 9h

Recap: DeFi Week of July 6 🦄

Hello Defiers, hope you’re having a great weekend :) Summing up last week: Yield farming is producing unintended consequences as demand for Dai as a way to access governance tokens, is causing it to t...